Correlation Between PepsiCo and China Aircraft
Can any of the company-specific risk be diversified away by investing in both PepsiCo and China Aircraft at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PepsiCo and China Aircraft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and China Aircraft Leasing, you can compare the effects of market volatilities on PepsiCo and China Aircraft and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PepsiCo with a short position of China Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and China Aircraft.
Diversification Opportunities for PepsiCo and China Aircraft
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PepsiCo and China is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and China Aircraft Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Aircraft Leasing and PepsiCo is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PepsiCo are associated (or correlated) with China Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Aircraft Leasing has no effect on the direction of PepsiCo i.e., PepsiCo and China Aircraft go up and down completely randomly.
Pair Corralation between PepsiCo and China Aircraft
If you would invest 40.00 in China Aircraft Leasing on September 13, 2024 and sell it today you would earn a total of 0.00 from holding China Aircraft Leasing or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. China Aircraft Leasing
Performance |
| Timeline |
| PepsiCo |
| China Aircraft Leasing |
PepsiCo and China Aircraft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and China Aircraft
The main advantage of trading using opposite PepsiCo and China Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo position performs unexpectedly, China Aircraft can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in China Aircraft will offset losses from the drop in China Aircraft's long position.| PepsiCo vs. Celsius Holdings | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Coca Cola Femsa SAB | PepsiCo vs. Keurig Dr Pepper |
| China Aircraft vs. BRP Inc | China Aircraft vs. Genfit | China Aircraft vs. Hasbro Inc | China Aircraft vs. JD Sports Fashion |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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